By FCPA Dr. Jim McFie
The first industrial revolution occurred between 1760 and 1830. It took place largely in Britain; in order to make the most of the manufacturing techniques that were developed, the British forbade the export of the newly developed machinery, skilled workers and those manufacturing techniques. However, just as some Kenyans get some products, for example “Bic biros made in Kenya”, manufactured in China at a very much lower cost than is the case in Kenya, some Britons saw profitable industrial opportunities abroad, while continental European businessmen sought to lure British knowhow to their countries.
Two Englishmen, William and John Cockerill, brought the Industrial Revolution to Belgium by developing machine shops at Liège in the year 1807. Belgium became the first country in continental Europe to be transformed economically. Just as was the case in Britain, the Belgian Industrial Revolution centered on iron, coal, and textiles. Russia is the largest country in the world at seventeen million square kilometers: the part in Europe is just under four million square kilometers and occupies 40% of Europe; Ukraine is the largest whole-country in Europe at 603,628 square kilometers; France (including the island of Corsica) is the next biggest in Europe at 551,695 square kilometers– Kenya is bigger at 580,000 square kilometers.
France was more slowly and less thoroughly industrialized than either Britain or Belgium. While Britain
was establishing its industrial leadership, France was immersed in its Revolution, which lasted from 1789 to the end of 1799. The uncertain political situation discouraged large investments in industrialinnovations. By 1848 France had become an industrial power, but, despite great growth under the Second Empire, it remained behind Britain. Political conditions in other nations, together with less well-off middle classes, hindered industrial expansion. Germany, for example, despite vast resources of coal and iron, did not begin its industrial expansion until after national unity was achieved in 1870.
Once begun, Germany’s industrial production grew so rapidly that by the end of the 1880s, it was out-producing Britain in steel and had become the world leader in the chemical industries. The Germans areknown for their hard work. An early landmark moment in the Industrial Revolution in the US came about in 1785 when Samuel Slater brought new manufacturing technologies from Britain to the United States and founded the first US cotton mill in Beverly, Massachusetts. The US civil war between 1861 and1865 disrupted industrialization in the country. Following the Civil War, industrialization increased at a
breakneck pace. From 1865 to 1900, the Second Industrial Revolution or the American Industrial Revolution took place.
Between 1800 and 1860, the country expanded greatly, and the new territory was rich in natural resources. Completing the first transcontinental railroad in 1869 was a major milestone, making it easier to transport people, raw materials, and products across the country. The US also had vast humanresources: between 1860 and 1900, fourteen million immigrants came to the country, providing workers for an array of industries. Some argue that the second industrial revolution occurred in the early 20th century, when Henry Ford mastered the moving assembly line and ushered in the age of mass production.The rise of U.S. industrial power in the 19th and 20th centuries also far outstripped European efforts. And Japan too joined the Industrial Revolution with marked success.
The Third Industrial Revolution, or the Digital Revolution, began in the late 1960s and was characterized by the spread of automation and digitization through the use of electronics and computers, the invention of the Internet, and the discovery of nuclear energy. This era witnessed the rise of electronics from computers to new technologies that enable the automation of industrial processes. Advancements
in telecommunications led the way for widespread globalization, which in turn enabled industries to offshore production to low-cost economies and radicalize business models worldwide. The Fourth Industrial Revolution is taking place at the moment: it represents a fundamental change in the way
some people live, work and relate to one another.
Its technologies, such as artificial intelligence, genome editing, augmented reality, robotics, and 3-D
printing, are rapidly changing the way humans create, exchange, and distribute value. As occurred in the previous revolutions, this will profoundly transform institutions, industries, and individuals. More importantly, this revolution will be guided by the choices that people make today: the world in 50 to 100 years from now will owe a lot of its character to how we think about, invest in, and deploy these powerful new technologies. Some people think that Henry Ford invented the automobile. This is not true. While he may not have invented the automobile, he did offer a new way of manufacturing a large number of vehicles.
This method of production was the moving assembly line. It did not just usher in the age of the car; it changed work forever. He first fully implemented his innovation on December 1, 1913. Like a lot of his other industrial production insights, the assembly line was met with hatred and suspicion by many of his workers. Instead of producing one car at a time, in an a la carte way, manufacturing a limited productionmodel reduced costs enormously. Ford identified this as an opportunity and implemented a strategy that has since been replicated by many industries – he turned to automation, utilizing the assembly line. In other words, Ford productized the service model.
Meryl Johnston is a UK Chartered Accountant who decided to practise on her own. After running her firm for eighteen months, she had built up a client base of small businesses and had also landed a couple of larger contracts. She was working six days a week, sometimes seven, and finding it a very difficult business to scale up the business as the projects were all so different. Her business was profitable, but she was earning less than she had when she was working at a salaried job and she was working far mor hours. She had not achieved her goal of having a comparable income with more flexibility and free time to travel. She could see there was potential to achieve that goal, but it was going to take at least another year or two of working late nights and whole weekends and there was no guarantee that she would ever achieve it.
It was at about this time that she joined a productized service mastermind in the online entrepreneurs’ community of which she is a member. Looking around her it seemed as if there were plenty of startups and businesses experiencing huge growth, but looking at her own business, she could call the growthonly moderate. As she discussed with other people in the community, she realized she was the growth in her business. She was doing all the sales work including quotes, proposal writing and face to face meetings and she was also handling everything related to setting up the client on their new accounting system.
Once the client was familiar with their new processes and she had sorted out any initial problems, she could pass on the regular accounting and bookkeeping work to her team. She found that margins were better on bigger clients but it could take between three and four months from the initial client contact to her finalizing the handover to her team. Being a new business, she had only new clients and it had got to the point where she was too busy to take on new work yet she was still not hitting her revenue targets. There were two options to change this:
(i) hire someone to do some of the sales and client implementation work she was doing; or
(ii) change the type of work she was going after so she could simplify the sales process and handover to her team in one week instead of four months. She looked into hiring someone to take over the sales and client implementation work, but for a number of reasons at this stage of her business it was not viable.
That left her with option
(ii), changing the product offering and sales process. She discussed this with a colleague in one of their mastermind sessions and she realized that she needed to learn how to say “no” to customers that were
not a good fit, rather than spending a lot of time trying to adapt her product to what they wanted. During the course of the mastermind sessions, she had made some progress in productizing her consulting business and she had about half a dozen clients on fixed fee monthly plans. The problem was each plan was customized for the client and weeks, and sometimes months, were still being spent scoping out the client’s requirements, preparing a proposal and negotiating the contract.
This business model had the potential for recurring revenue but she was still the bottleneck in how quickly her business could grow. She thought she was being niche but in reality she was not. From here things progressed fairly quickly but instead of trying to be everything to everyone, she needed to pick a specific accounting service and do it well. It needed to be simple enough that someone could select their plan and sign-up on the website rather than going through an extended sales process. She spent three days working on a website and launched her online accounting business at the end of that week. Her mini startup week was highly effective!
It is amazing what a person can achieve in seven days when one locks oneself away from distractions, prioritizes tasks and sets aggressive timeframes to get things done. Her firm is continuing a growth phaseand is focused on systemization, scaling and customer acquisition. She grew from a small number to the equivalent of KSH 10,000,000 in eight months. Having always prepared custom proposals, one of the things she found the hardest was fitting her product into three tiers and deciding what to include in each tier.
If you run a small firm, think about emulating Meryl Johnston. You may not make the turnover she has made in a better off environment, but you may be the start of a new method of running an accounting firm in Kenya.